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Dynamics of effort allocation and evolution of trust: an agent-based model

  • Hassani Mahmooei, Behrooz
  • Parris, Brett

Trust is a dynamic and complex phenomenon and understanding the factors which affect its formation, evolution and disappearance is a critical research issue. It has been shown that trust plays a key role in how human and social capital develop, how economies grow and how societies progress. In this paper, we present an agent-based model of the relations between a dynamic effort allocation system, an evolving trust framework and a reputation module to study how changes in micro-level rent-seeking traits and decisions can shape the emergence of trust across the simulated environment. According to our results, variations in trust are correlated more with the returns to being productive, rather than rent-seeking. In line with previous studies, our model shows that higher than average levels of risk-taking by agents lead to further trust and gains during an interaction, though taken to an extreme, both trust and gain can decline as a result of reckless decisions. We also report on the formation of trust clusters in our model as an emergent phenomenon.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44919.

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Date of creation: Jul 2012
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Handle: RePEc:pra:mprapa:44919
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  1. Munir Quddus & Michael Goldsby & Mahmud Farooque, 2000. "Trust: The Social Virtues and the Creation of Prosperity--A Review Article," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 87-98, Winter.
  2. Tatham, Peter & Kovács, Gyöngyi, 2010. "The application of "swift trust" to humanitarian logistics," International Journal of Production Economics, Elsevier, vol. 126(1), pages 35-45, July.
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  4. Kydd, Andrew H., 2010. "Learning together, growing apart: Global warming, energy policy and international trust," Energy Policy, Elsevier, vol. 38(6), pages 2675-2680, June.
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  7. Vogler, John, 2010. "The institutionalisation of trust in the international climate regime," Energy Policy, Elsevier, vol. 38(6), pages 2681-2687, June.
  8. Kjell Hausken, 2005. "Production and Conflict Models Versus Rent-Seeking Models," Public Choice, Springer, vol. 123(1), pages 59-93, April.
  9. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
  10. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  11. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-38, May.
  12. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
  13. Wang, Lanlan & Gordon, Peter, 2011. "Trust and institutions: A multilevel analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 583-593.
  14. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  15. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
  16. Labonne, Julien & Chase, Robert S., 2010. "A road to trust," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 253-261, June.
  17. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
  18. Michael Macy & Yoshimichi Sato, 2008. "Reply to Will and Hegselmann," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 11(4), pages 11.
  19. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  20. Tollison, Robert D, 1982. "Rent Seeking: A Survey," Kyklos, Wiley Blackwell, vol. 35(4), pages 575-602.
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